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IIC Principles and Practice of Insurance Sample Questions:
1. The risk manager of an oil refinery is seeking ways to transfer the pollution risk of a new drilling method.
What is the best option?
A) Use a non-insurance loss-financing transfer agreement to insure the risk
B) Retain the risk
C) Add the risk to the company's standard commercial property and liability policies
D) Transfer the risk using a surety bond
2. Which insurance term is defined as providing compensation for losses or expenses that have been incurred?
A) Indemnify
B) Salvage
C) Pure captive
D) Utmost good faith
3. A retailer reports $250,000 revenues and $100,000 expenses, and projects $50,000 in sustained growth next year. What is its net income for the past year?
A) $150,000
B) $200,000
C) $300,000
D) $250,000
4. Why does the Office of the Superintendent of Financial Institutions (OSFI) control the types of investments insurers are allowed to make?
A) To minimize industry indemnifications
B) To minimize insurers' investment loss exposures
C) To maximize industry profits
D) To maximize insurers' returns on investments
5. What is the definition of subrogation?
A) A promise by one party to release another from responsibility in exchange for money
B) The process allowing an insurer that paid a claim to recover the amount from the legally responsible party
C) The full payout an insurer makes before receiving the deductible
D) The right of the insurer to take action against the insured in cases of fraud
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: A,D | Question # 3 Answer: A | Question # 4 Answer: B | Question # 5 Answer: B |
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